MADISON, Wis.–It’s the “big question” on everyone’s mind, according to CUNA Mutual Chief Economist Steve Rick: Is the U.S. economy is in a recession?
Steve Rick
In his newest Trends Report on credit union performance, Rick doesn’t offer a specific answer. But he does have a pretty rosy forecast for credit union performance for the remainder of the year even if slightly less rosy for the year to follow.
As has received significant media coverage, Rick noted that for the second consecutive quarter, the U.S. economy produced fewer goods and services as measured by Gross Domestic Product than the quarter before at a seasonally-adjusted annual rate.
“Though many call two consecutive declines in GDP a recession, the National Bureau of Economic Research, NBER, may not be ready to classify the economy as recessionary,” Rick stated in the Trends Report.
Rick noted that according to the NBER’s recession criteria, the economic downturn must be of sufficient depth, diffusion and duration to be classified as such. He said much of the economic variability during the last year was caused by large swings in inventories, rather than being due to declines in final sales to domestic purchasers.
Slower Growth in 2023
“Inventory was a major source of economic growth in the fourth quarter of 2021, but now is a major source of economic drag as businesses slowed their inventory accumulation,” Rick stated. “Compared to the second quarter of 2021, real GDP rose 1.6%, only slightly below the 2% long-run trend growth rate. Higher interest rates, the ongoing war in the Ukraine and supply side disruptions continue to weigh on the U.S. and global economy. But my baseline forecast is continued economic growth for the second half of 2022 and slower than trend growth in 2023.”
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